New 👉 Ask your RBI Grade B 2025 Preparation Queries Here!!

    Register

    Question

    For issuing sweat equity shares, which of the following

    statements accurately reflects the conditions that must be fulfilled?
    A A company may issue sweat equity shares if authorized by a special resolution, specifying the number of shares and market price, and the resolution must also include the terms of the equity shares and their exact consideration Correct Answer Incorrect Answer
    B A company can issue sweat equity shares provided that a special resolution authorizes it, detailing the number of shares, current market price, consideration, and the specific class of directors or employees eligible for the shares Correct Answer Incorrect Answer
    C The issuance of sweat equity shares requires a special resolution and must detail the number of shares and market price, but the consideration and specific classes of directors or employees do not need to be mentioned Correct Answer Incorrect Answer
    D A company is allowed to issue sweat equity shares if authorized by a special resolution which specifies the consideration and market price of shares, but does not need to include the number of shares or the class of directors or employees Correct Answer Incorrect Answer
    E A company can issue sweat equity shares if the special resolution includes the number of shares, market price, and class of directors or employees, but the consideration is optional and not required Correct Answer Incorrect Answer

    Solution

    Companies Act Section 54. Issue of sweat equity shares: (1) Notwithstanding anything contained in section 53, a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely:— (a) the issue is authorised by a special resolution passed by the company; (b) the resolution specifies the number of shares, the current market price, consideration, if any, and the class or classes of  directors or employees to whom such equity shares are to be issued; (d) where the equity shares of the company are listed on a  recognised stock exchange , the sweat equity shares are issued in accordance with the regulations made by the  Securities and Exchange Board in this behalf and if they are not so listed, the sweat equity shares are issued in accordance with such rules as may be prescribed. 

    Practice Next